Reimbursement proceedings for shortfall before the Court of Audit: Appeals against judgments handed down by the Court of Audit

After years of proceedings before the Court of Audit, the former mayor finally receives the call from his lawyer. The news is not good: he has been ordered to repay €3.2 million to the Town Council, plus interest. Is this the end of the road? What can he do to challenge that judgment?

1. What appeals can be brought against judgments handed down in reimbursement proceedings for shortfall?

The rules for appealing a judgment in reimbursement proceedings for shortfall (“reintegro por alcance”), once the judicial proceedings examined in our previous article have concluded, are found, first and foremost, in Organic Law 2/1982 of 12 May on the Court of Audit (hereinafter, the “LOTCu”). That law lays down the basic framework: the first instance is decided by an Audit Councillor (“Consejero de Cuentas”) (Art. 25 LOTCu); his or her judgment may be appealed before a Chamber of the Court itself, namely the Judicial Chamber (“Sala de Justicia”) (Art. 24.2 LOTCu); and, beyond that, recourse may be had to the Supreme Court in certain cases (Art. 49 LOTCu).

In addition, the Second Final Provision of the LOTCu provides that administrative procedure shall apply on a supplementary basis, as governed by Law 29/1998 of 13 July regulating the Contentious-Administrative Jurisdiction (hereinafter, the “LJCA”) and Law 1/2000 of 7 January on Civil Procedure (hereinafter, the “LEC”).

Those basic rules are developed in Law 7/1988 of 5 April on the Functioning of the Court of Audit (hereinafter, the “LFTCu”), Articles 80 to 84 of which are devoted to appeals. Accordingly, three avenues of appeal on the merits of the judgment are provided for, in addition to the complaint appeal (“recurso de queja”) (which does not address the merits of the case):

• The appeal (“apelación”) (Art. 80.2 LFTCu), to request that the Judicial Chamber of the Court of Audit review the Audit Councillor’s judgment.
  • If the appeal is not admitted, the affected party may lodge a complaint appeal (Art. 54.2.a) LFTCu).
• The cassation appeal (“casación”) (Arts. 81 and 82 LFTCu), against judgments of the Judicial Chamber, before the Supreme Court.
• The application for review (“revision”) (Art. 83 LFTCu), an exceptional remedy before the Supreme Court to reopen final judgments where serious and exceptional circumstances arise.

Neither the cassation appeal nor the application for review requires a deposit. Furthermore, neither has suspensive effect on the enforcement of the judgment, unless the appellant provides “sufficient security or guarantee”, all in accordance with Art. 84 LFTCu.

As regards the appeal, although the law generally requires a deposit in order to appeal (€50 against judgments and €25 against orders), ex the Fifteenth Additional Provision of the LOPJ (Organic Law on the Judiciary), and the LFTCu expressly exempts only cassation and review from it, in practice the accounting jurisdiction does not require it for appeals either. Nor does it require the court fee, on the understanding that the fee does not apply to this jurisdiction[1].

Lastly, the role of the Supreme Court within the accounting jurisdiction system deserves attention. Whereas the LOTCu describes the Court of Audit as the supreme audit body (Art. 1.1) and, as regards accounting adjudication, as the sole body in its jurisdiction (Art. 1.2), the Constitutional Court qualified these attributes in , or, put another way, the Supreme Court has full powers to review accounting liability.

2. The appeal

The ordinary means of challenging the judgment handed down by the Audit Councillor at first instance is the appeal (Art. 80.2 LFTCu), which will be decided by the Judicial Chamber of the Court of Audit (Art. 54.1.b) LFTCu).

As to the time limit and form for lodging the appeal, Art. 80.3 LFTCu refers to the rules governing appeals in the contentious-administrative jurisdiction. Consequently, under Art. 85.1 LJCA, the appeal must be lodged within 15 days of service of the judgment, setting out the submissions on which it is based.

The lodging and admission of the appeal are dealt with before the Audit Councillor who handed down the judgment, who serves it on the other parties so that they may oppose it within a common period of 15 days (Art. 85.2 LJCA). The Councillor then forwards the case file to the Chamber, which is responsible, where applicable, for the taking of evidence, the hearing or written closing submissions, and the decision (Art. 85 LJCA).

Furthermore, the Audit Councillor has jurisdiction, at the request of a party, to adopt such interim measures as may be appropriate or to order provisional enforcement of the judgment under appeal (Arts. 83 and 84 LJCA, and 462 LEC).

As regards standing, any party adversely affected by the judgment may appeal, and the Public Prosecutor’s Office has standing in all reimbursement proceedings for shortfall (Court of Audit Judgment (STCu) 19/2013 of 17 September).

The appeal allows everything done in the proceedings to be reviewed, on questions of both fact and law. It is subject to two limits: it cannot worsen the position of the appellant (prohibition of reformatio in peius) nor rule on matters that have been accepted (STCu 11/2013 of 11 April). That said, it is not enough to repeat the arguments raised at first instance. That technique is not “a legally acceptable course of action” and allows the appeal to be dismissed out of hand (STCu 5/2023 of 11 July). The notice of appeal must rebut the reasoning of the judgment “by means of a rational critical assessment” (STCu 19/2013 of 17 September).

The most difficult thing on appeal is to challenge the facts. The assessment of the evidence is a matter for the first-instance body, and “mere submissions by a party” are not enough to overturn it (STCu 7/2004 of 3 March); rather, for it to be altered, that assessment must be illogical or arbitrary (STCu 16/2008 of 1 December).

Moreover, the taking of evidence at second instance is exceptional: it is only permitted in the cases provided for in Art. 460 LEC, and the Chamber usually refuses to admit new expert or documentary evidence that is not justified.

3. The cassation appeal

This avenue allows the matter to be appealed before the Supreme Court, specifically its Contentious-Administrative Chamber, which has exclusive jurisdiction to decide it (Art. 49 LOTCu and Arts. 52.2 and 81.1 LFTCu).

It does not lie against the Audit Councillor’s judgment; under Art. 81.2 LFTCu, only final judgments of the Chambers of the Court handed down on appeal or at sole instance may be challenged, together with certain orders that prevent proceedings from being commenced. Since Audit Councillors act only at first instance, and their judgments can always be appealed, they never have direct access to cassation. To reach the Supreme Court, one must first go through the Judicial Chamber.

The same provision required the amount at stake in the proceedings to exceed 3,000,000 pesetas. However, following the reform of cassation by Organic Law 7/2015, the Supreme Court reinterpreted the system in its Order (ATS) of 31 May 2017, reaching two conclusions:

• Judgments of the Chambers of the Court of Audit may be challenged “irrespective of the amount at stake in the proceedings in which they were handed down“.
• The appeal no longer has to be based on the exhaustive grounds set out in Art. 82.1 LFTCu, but must instead comply with the requirements of Art. 89.2 LJCA. It may therefore be brought on the basis of “any infringement of the legal order, whether procedural or substantive, or of case law” (Art. 88.1 LJCA).

The key becomes objective cassational interest. The notice of preparation must show that one of the grounds of cassational interest under Art. 88.2 and 3 LJCA is present (Art. 89.2.f) LJCA). The Supreme Court has reiterated this doctrine in subsequent decisions.

As regards standing, the appeal may be brought by the Public Prosecutor’s Office and by those who, having been claimants or defendants in the proceedings, may be adversely affected by the judgment. They must not have accepted another decision previously handed down on the same subject matter in the same proceedings (Art. 81.3 LFTCu).

The procedure is governed by the LJCA (Art. 84.1 LFTCu). The appeal is prepared before the Judicial Chamber itself within 30 days of service of the judgment (Art. 89.1 LJCA). If it considers the appeal duly prepared, the Chamber summons the parties to appear before the Supreme Court within a further 30 days (Art. 89.5 LJCA). Only if the Supreme Court admits the appeal does the period for lodging it begin (Art. 92.1 LJCA).

In practical terms, since the 2015 reform of the LOPJ, the main appellant in cassation has shifted from the defendant to the Public Prosecutor’s Office. Statistically, in 2021, of the three appeals lodged, two were brought by the Public Prosecutor’s Office and one by the defendant, and all three were upheld in full. Thus, although the number of cassation appeals has fallen markedly, cassation has proved far more fruitful[2].

4. The application for review

This is the most exceptional remedy: it is directed against final judgments and allows matters already decided to be reopened (Art. 83 LFTCu). It is decided by the Contentious-Administrative Chamber of the Supreme Court (Art. 49 LOTCu and Art. 52.2 LFTCu).

Although the law refers to judgments of the Chambers of the Court of Audit (Art. 52.2 LFTCu), the Supreme Court has held that review is also available against a judgment of an Audit Councillor that has become final because it was not appealed, on the basis that the nature of this remedy must prevail over the literal wording (Supreme Court Judgment (STS) of 25 June 1996).

Art. 83 LFTCu sets out an exhaustive list of the cases in which review is available:

1. Where, after the judgment, new documents decisive for the ruling come to light.
2. Where material errors, omissions of significant charges or other serious irregularities are discovered in the accounts.
3. Where the judgment was based on documents declared to be false, or whose falsity is acknowledged or declared subsequently.
4. Where the judgment was “unjustly obtained by means of malfeasance, bribery, violence or other fraudulent scheme“.
5. Where the judgment was based on a preliminary issue subsequently contradicted by a final judgment of the relevant jurisdiction.
6. Where there are conflicting decisions of the accounting jurisdiction, or decisions conflicting with judgments of the Supreme Court, in substantially identical cases.

This last ground, however, can no longer be relied upon. The Supreme Court considers that it has been “impliedly repealed” because, following the 2015 reform, that situation is channelled through cassation as a ground of cassational interest (Art. 88.2.a) LJCA) (STS 680/2022 of 7 June).

The procedure is governed by the LJCA (Art. 84.1 LFTCu). As to the time limit, the application must be lodged within three months of discovery of the ground for review, and never more than five years after publication of the judgment (Art. 102 LJCA and Art. 512 LEC).

Lastly, as with cassation, lodging the application does not prevent enforcement of the judgment, unless the applicant provides sufficient security or guarantee (Art. 84.2 LFTCu).

5. The complaint appeal

The complaint appeal is not directed against the judgment, but against the Audit Councillor’s decision not to admit the appeal. It is decided by the Judicial Chamber of the Court of Audit (Art. 54.2.a) LFTCu).

It is lodged directly with the Chamber, within 10 days of service of the decision refusing admission, together with a copy of the decision challenged (Art. 85.2 in fine LJCA and Arts. 494 and 495 LEC). The Chamber decides within five days. If it considers that the appeal was wrongly refused admission, it orders the Audit Councillor to continue processing it (Art. 495.2 LEC).

The complaint appeal also serves as a safeguard in relation to the amount at stake in the proceedings. The decision fixing that amount cannot be challenged at the time it is made. However, if an admissible appeal is subsequently rejected on account of the value assigned, the dissatisfied party may base the complaint appeal precisely on that improper determination (Art. 62.4 LFTCu).

6. Conclusion

Challenging judgments handed down in reimbursement proceedings for shortfall offers various avenues of defence. However, their strict requirements, the limits on reviewing the facts and the evidence, and the time limits for lodging appeals call for a rigorous litigation strategy, particularly given the risk of provisional enforcement of an adverse judgment.

Accordingly, obtaining specialist advice from the moment the decision is served is essential in order to identify the real prospects of appeal and properly protect the interests at stake.

At Ayuela Jiménez we have a team of lawyers specialising in Economic Criminal Law and in proceedings before the Court of Audit, ready to design a defence strategy tailored to each case and to support the client through every stage of the challenge.

 

[1] Carlos Aymerich Cano, “El recurso de apelación contable” [The accounting appeal], Revista General de Derecho Administrativo, No. 40 (2015): 2, https://www.researchgate.net/profile/Aymerich-Carlos/publication/316526571_EL_RECURSO_DE_APELACION_CONTABLE/links/59022aef0f7e9bcf65490700/EL-RECURSO-DE-APELACION-CONTABLE.pdf.

[2] Marco Peñas, Ester. “Análisis del enjuiciamiento contable ante el Tribunal de Cuentas y el Tribunal Supremo” [Analysis of accounting adjudication before the Court of Audit and the Supreme Court]. In Informe sobre la Justicia Administrativa 2022, edited by Alfonso Egea de Haro and coordinated by Jesús Redondo Martín, 356–357. Madrid: Centro de Investigación sobre Justicia Administrativa de la Universidad Autónoma de Madrid (CIJA-UAM), 2022. https://cija-uam.org/wp-content/uploads/2022/11/Informe_CIJA_2022_WEB.pdf